An extremist, not a fanatic

September 09, 2014

Preferences vs interests

Matthew Parris's piece in the Times has become notorious. However, he is raising an important point about political psychology which demands more attention than it gets.

He says:

I am not arguing that we should be careless of the needs of struggling people and places such as Clacton. But I am arguing - if I am honest - that we should be careless of their opinions.

This poses the old question: should politicians serve people's preferences or interests?

Parris is following a long bipartisan tradition which answers: the latter. This is what Edmund Burke meant when he said that MPs should ignore the "hasty opinion" of their constituents, and it's what various leftists have had in mind when they've worried about false consciousness.

The distinction matters because research (pdf) in behavioural economics shows that people's preferences often don't promote their interests. To take a few examples:

- Projection bias (pdf) means that we fail to foresee our future tastes. We fail to see that we'll adapt to some things (such as new consumer goods or to stock market losses) but not to others, such as commuting.

- Hyperbolic discounting means that we might never get round to things that are good for us, such as starting a pension plan or going on a diet.

- Adaptive preferences cause the poor and unjustly treated to reconcile themselves to their situation and so not demand their full entitlements.

- Anchoring effects and just world illusion cause people to accept inequalities.

- Low subjective well-being can cause people to make systematic errors such as borrowing and spending too much.

- People often violate the most basic requirements of rational preferences, such as transitivity.

Given this evidence, Parris's position seems quite reasonable. I've argued for it myself in the context of immigration. And many critics of Parris would surely say we should ignore the preferences of (say) climate change deniers or homophobes. And surely every decent parent knows that we can advance sometimes interests by ignoring their preferences.

So, what's the problem?

Simple. History. In practice, ignoring people's preferences has often meant ignoring and violating even their most basic interests. Benevolent despots have been much more discussed than observed.

There is, however, a solution here. It's perfectly possible to have an institutional framework which protects interests whilst ignoring some preferences. Human rights exist precisely to ensure that our basic interests are protected - not least from others irrational or vicious preferences.

However, I suspect the disquiet about Parris's article is founded in the fear that these rights aren't extensive enough to ensure that the interests of "struggling people" are sufficiently protected.

There is a solution here - welfare rights. Just as a right to liberty protects us from the mob, so a right to welfare would protect the worst off from those who would go further than Parris in being heedless of them. The answer to many political problems is - a citizens' basic income.

Comments

Most of these treat failure to agree with your personal priors as forms of error. The error is in fact yours for assuming these priors are correct for all individuals. Since we know some element of preference is hard-wired and therefore certain to vary in a population, we know a monolithic view of preference can only be wrong. This means it is certain that you are wrong.

So there is another problem to be factored in here - who decides what the interests are and who measures when interests deviate from preferences?

Or put another way who audits the auditors?

or put another way - who are the auditors and how are they chosen?

or put another way - how is it that the auditors know the difference between interest and preference and how are they immune from the problems you highlight or problems you haven't highlighted more to the point?

The answer to many political problems is people taking more ownership and responsibility and stop leaving it to the likes of Matthew Parris.

«Matthew Parris says we and talks about them. [ ... ] Or put another way who audits the auditors? [ ... ] how is it that the auditors know the difference between interest and preference and how are they immune from the problems you highlight or problems you haven't highlighted more to the point?»

It is the old problem of the philosopher-kings: if there were highly wise philosopher-kings who also were highly just, then they would know their subjects interests and act to achieve them. And if you believe that, you might also be interested in buying a lightly used bridge in central London :-).

Which is what ChrisD summarizes too as:

«In practice, ignoring people's preferences has often meant ignoring and violating even their most basic interests. Benevolent despots have been much more discussed than observed.»

The aim of democracy is not to achieve the best government, but to achieve the government that the voters deserve because they chose it.

If the voters want to choose bad governments who drive them to ruin, they ought to get them.

Hopefully in the long run the countries where voters learn to choose good governments will survive, the other countries won't.

BTW I think that using the Parris article to discuss the "benevolent despot" issue is amusing but a stretch, one of the many that ChrisD uses to talk about his favoured topics.

My understanding of the Parris article is that it is straightforward political positioning: that a party cannot appeal to all voters, but needs to make choices as to what kind of voters can be their constituency.

The vital detail in the article is that in Clacton "you can get a three-bedroom detached bungalow for £94,995" so it is not an area where middle-class residents can have the "aspiration" for massive tax-free capital gains from property speculation; therefore they are not part of the main modern Tory (or New Labour) constituency.

As George Osborne clearly explained, getting massive property capital gains and tax-free is the definition of "the aspirations of ordinary people":

«Mr Osborne said: “When inheritance tax was first introduced it was designed to hit the very rich … Instead, thanks to Gordon Brown, this unfair tax falls increasingly on the aspirations of ordinary people.

“These are people who have worked all their lives. People who have saved money all their lives. People who have already paid taxes once on their income.

“People whose only crime in the eyes of the taxman is that instead of spending their savings on themselves, they want to pass something on to their families. People who feel the most basic human instinct of all: they aspire to a better life for their children and their grandchildren.”»

Similarly:

«Nick de Bois, the MP for Enfield North, said: “In what is otherwise a good first step in dealing with social care, I am concerned that having built our reputation on inheritance tax moves, we should not jeopardise that and I hope we can look at other ways for paying for this. Some will see this as a tax on aspiration and that is not the right thing to do.”»

Parris seems to argue that Clacton's residents are simply not the sort of voters to whom the core Tory policies can appeal.

«Chris, you've argued for it in case of immigration because you only care about economics, whch is the lens through which you see and think about everything.»

I doubt this very much... He may be using the language of an economist, but my suspicion is that his motivations are progressive :-).

For a "progressive" economist in first-world countries it is very easy to understand that immigration (and offshoring) impact positively people in third-world countries who are desperately poor and have brutally wretched lives.

I would guess that improving their life by advocating immigration (and offshoring) counts seems to them far more important than improving the lives of low-income workers in first-world countries, even if the biggest beneficiaries may actually be property owners in those first-world countries.

Also there is a case that the impact of immigration (and offshoring) on first-world workers has been largely to stop their average incomes from going up, or to make them go down only slightly; while the impact on the immigrants (and offshore workers) has been to increase their incomes by several times, from desperately poor to just rather poor.

«I don't think you really understand (in your heart of hearts) the concerns people have about culture and the lack of integration.»

I don't think that this comment shows that its author (in his heart of hearts) really understands how how brutally wretched usually are the former lives of immigrants (and offshore workers) from third-world countries.

Perhaps ChrisD does and considers first-world problems about culture and integration as having much lower relative weight than third-world problems like large numbers of preventable deaths and crippling sickness due to brutally wretched poverty.

Then I find the arguments of some progressive economists who advocate immigration (and offshoring) disingenuous because usually:

* They tend to argue that immigration (and offshoring) haven't had a negative impact on first-world low-income workers because low-income worker wages in first-world countries have not gone down or only slightly, and this to me seems disingenuous as they pretend that there has been no impact on potential wage growth.

* Low-income workers in first-world countries can legitimately choose to not care about how wretched are the lives of the poor in the third-world, and argue that the economic policy of their countries should aim at maximizing their wage and jobs growth, not sacrificing them to boost those of wretched poor of the third-world; especially as immigration (and offshoring) benefit massively (and perhaps mainly) the incomes of property owners in the first world, who don't care themselves how wretched are the lives of the poor in the third-world.

«while the impact on the immigrants (and offshore workers) has been to increase their incomes by several times, from desperately poor to just rather poor.»

The numbers: when China joined the WTO ther average wage of a Shenzen worker was $1 per hour; 12 years later it is $5. That's nearly-15% wage raises compound per year for over 10 years, for dozens of millions of new jobs in Shenzen; similarly in Japan and Korea before that.

The price has been the destruction of much better paid unionized jobs in many factories in the North of England, the Great Lakes of the USA and similar places in the first-world (plus of course enormously increased profits and share of national income for property owners in the first-world, and lower product prices for the net benefit of rentiers).

For "progressive" economists who fancy themselves that has been a small price to pay to liberate hundreds of millions of poor asians from brutally wretched lives. In the great calculus of humanity's welfare that is a great *net* gain.

I like the way that you shaped up the article. Its really enhance my knowledge. Waiting for your vext post.
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